Peninsula cities are considering changes to their affordable-housing laws following a court’s ruling that cities cannot set initial rents on new rental projects.
The behind-the-scenes talks about local housing ordinances, potentially impacting at least a dozen cities in San Mateo County, comes almost two years after the decision in the 2009 case City of Los Angeles vs. Palmer.
In that case, a federal judge ruled that cities cannot require developers to offer a percentage of new rental housing at below market rate restricted rents, citing a state law that allows the developers to set initial rents.
While new housing projects have been scarcer during in the weak economy, the case could impact efforts to provide rentals for low- and moderate-income families on the Peninsula, one of the nation’s most expensive housing markets, said Chris Mohr, the executive director of the Housing Leadership Council.
“If things were to improve and production was to increase again, it would slow down the production of affordable units,” Mohr said.
But cities also are looking for ways to ensure affordable housing continues to be built after the Palmer case.
The San Mateo City Council held a closed-session meeting in March to discuss the Palmer decision. The ruling raises questions about whether the city’s “requirement [for affordable housing is] pre-empted as it applies to rental housing,” City Attorney Shawn Mason said.
San Mateo’s housing ordinance requires at least 10 percent of a project’s units to be below market rate, including rental projects. Asked if the city is considering changes, Mason said, “We’re examining options with the council,” but he declined to discuss details.
Other cities also are considering new strategies nearly two years after the Palmer ruling, a delay possibly explained by a shortage of projects that could be affected by the decision.
San Carlos amended its ordinance last year and now charges developers fees instead of requiring them to set aside units with lower rent prices.
Last month, San Carlos Housing Manager Mark Sawicki shared that fee strategy with a group of housing officials from the county and its 20 cities. Several cities are now considering some kind of countywide effort, Mohr said, though the talks are preliminary.
Menlo Park’s housing ordinance from the late 1980s requires a certain number of affordable units in rental projects, but no projects have ever been proposed that would be affected, Housing Director Douglas Frederick said.
Last year, the city added a severability clause in case that aspect of its ordinance was challenged. But the city still collects fees from commercial developers that go toward increasing affordable housing, Frederick said.